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Federal Student Loans versus Private Student Loans – which is best for me?
by: Vanessa McHooley

Federal Student Loans versus Private Student Loans – which is best for me?

You have gotten all the grants and scholarships you can, but you still need money for your education. It’s time to look at loans. But which is better – federal loans or private loans?

Federal loans

If you need to take out a loan to help pay for your education, you should always look at federal loans first. The largest source of education loans around, federal loans are long-term loans with low interest rates designed for students who need money for their educations. They have several benefits when compared to other borrowing options, including

Lower interest rates
Options to postpone payments
Longer repayment terms
Easier credit requirements

Eligibility for some of these loans, such as the Federal Perkins Loan and the Subsidized Federal Stafford Loan, are needs-based, while others are not. You will need to complete a FAFSA to apply for these loans.

The most common federal student loans are listed below:

Federal Perkins Loan

The Federal Perkins Loan is a low-interest loan available to students who have exceptional financial need, based on the information provided on their FAFSA. Undergraduates can borrow up to $4,000 per year, while graduate students can borrow up to $6,000 per year.

Federal Stafford Loan

The Federal Stafford Loan is available to undergraduates and graduate students. Loan amounts depend on a student’s year in school and whether they are financially dependent or independent. Your college’s financial aid office determines your eligibility.

Stafford loans can be subsidized or unsubsidized. Financial need determines which type a student is eligible for. Subsidized loans are based on financial need. The government pays the interest while the student is in school, in deferment, and in their grace period.

Unsubsidized loans are available to all students, regardless of income. The student is responsible for all interest.

Federal PLUS Loan

The Federal PLUS Loan (Parent Loan for Undergraduate Students) is a low-interest education loan for parents. Each year, parents can borrow up to the cost of attendance, minus other financial aid received (scholarships, grants, student loans, etc.).

The PLUS loan is not based on financial need. Qualified applicants must pass a credit check.

Private loans

Private loans are designed to supplement federal loan programs and are available from schools, banks, and education loan organizations. They are usually used to cover education costs that cannot be met by federal aid.

Terms for these loans vary according to the lender and your credit history. Keep these things in mind as you consider taking out a private loan:

Private loans have credit requirements, and you may need a co-signer
The lender determines the interest rates and fees, which may be affected by your credit score
Private loans may not offer deferment options
Private loan programs may offer borrower benefits, such as interest rate discounts or rebates

No matter what type of loan you take out, be conservative and borrow wisely! All loans have to be repaid, whether federal or private.

This article is distributed by NextStudent. At NextStudent, we believe that getting an education is the best investment you can make, and we’re dedicated to helping you pursue your education dreams by making college funding as easy as possible. We invite you to learn more about Federal Student Loans or Private Student Loans at http://www.NextStudent.com.

About The Author

Vanessa McHooley

My goal is to help every student succeed – education is one of the most important things a person can have, so I have made it my personal mission to help every student pay for their education. Aside from that, I am just a pretty average girl from SD.

Pell Grants Help College Students Reduce Credit Card Debt

College students are among the people who are now faced with huge credit card debts. Common belief is that most of the students come from wealthy folks who purchase anything they want. But that is just not the case. According to a research done recently, most students use their credit cards as a means to continue their education. And every year, the average debt of a college student increases and by the time a student graduates, the total amount could be within the range of $20,000-$22,000.
With the current occurrences in the economy, such as people losing their jobs, companies getting shut down, and the prime commodities and services increasing in prices, th
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e toll on education is greatly adverse. Students whose parents are laid off from work are basically struggling to keep up with expenses of college education. That is one of the main reasons why many students are in debt and why many are seeking debt help.
Many students apply for college loans to pay for their credit card debts. But while these loans help students to finish their education, these types of loans automatically obligate students to pay for them once they graduate. A proposed solution to the matter is still underway but expectations are high that this will mark the end of students who are suffering from debt and in need of credit card debt assistance.
The Federal Pell Grants is a government debt relief program that is reserved for college students who are in need of financial assistance but cannot generate enough income to come to school. This year alone, the maximum grant that can be given to a qualified college student is $5,350.
The amount of the grant depends on a number of factors, but the most important is the status of the student. If a qualified person is a full-time student, then he/she is entitled to the largest amount available While this grant is not created to purposely end debt, it boosts a family’s financial standings and that money that is saved for school can be used to settle credit card debt instead.

By: Jiles Masson

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